iPod, you profit
By Garry Barker
March 11, 2004
Livewire
At the risk of plunging everyone into the walnut-panelled gloominess of corporate thinking, may we report that Steven Milunovich, analyst with international bankers and billionaires Merrill Lynch, sees the iPod as something akin to a new California oil strike.
Sales of the players, boosted by the launch in the United States last month of the coloured iPod mini range "could be a $US1 billion ($A1.3 billion) business for Apple by the end of this year and $US1.6 billion by September, 2006".
Milunovich says the iPod is not a "one-hit wonder" and will bring significant numbers of Windows users into the Macintosh fold by "creating a halo effect that it's OK to buy Apple".
Nothing like an analyst with a penchant for poetic expression.
Milunovich calculates that iPod and iTunes Music Store will contribute 15 cents a share to earnings in 2004, rising to 25 cents and revenue of $US2 billion in 2006. He also estimates that the iPod, G5 and future products will push Apple's shares to $US29 this year, $5 up on the current price.
Apple will retain its 31 per cent share of the MP3 market and 55 per cent share of total digital player revenue "longer than many think", he says, adding that iTunes Music Store revenue will rise to $US200 million in 2005 and $US350 million in 2006.
Apple gets about 10 cents from every song sold, the music companies 65 cents and infrastructure takes the rest.
Fred Anderson, about-to-retire architect of the mothership's now sound finances, says Apple would "like to become a $10 billion company again".
Speaking at the Morgan Stanley conference in New York last week, he named three key drivers for Apple: portable mobility and wireless communications, the digital lifestyle and music. Apple's ability to innovate quickly was also critically important, he said.
"We have this modern Unix-based technology in Mac OS X (and can) innovate faster than Redmond (Microsoft)," he said, noting that Windows was last upgraded in 2001 while Apple has done four since then.
Also, instead of cutting its spending after the tech-wreck, Apple continued to invest in research and development, up from $US300 million three years ago to $US500 million a year now.
Clapton coup
While midnight copyright raids on student dormitories continue in the US, reality is beginning to seep into the recording industry.
Many bands and performers now launch their ditties on the internet, thereby avoiding the big record companies, which seem to over-promote those they see as having commercial potential while blocking others with talent. Mostly these privateers are relative unknowns, but that seems to be changing.
Eric Clapton has just released a four-track EP previewing his forthcoming album honouring bluesman Robert Johnson.
More significantly, Clapton is doing this exclusively through Apple's iTunes Music Store, where song sales are heading past 150 million.
We continue not to know why iTMS has not opened outside the US but assume, perhaps unfairly, that the record companies are playing hardball on a tough wicket. But it is about time something happened!
AI
